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Issue #1730      May 11, 2016

Budget 2016-17

Medicare or Warfare

The Treasurer claims that the budget is “a plan for jobs and growth”, a plan to “continue to grow and shape our economy as we transition from the unprecedented mining investment boom to a stronger, more diverse, new economy”. The “plan” is in fact to spend $1 trillion on “defence” and fund this with massive cuts in spending on Medicare, schools, public hospitals and social services.

A Medicare rally in Sydney earlier this year. (Photo: Anna Pha)

John Falzon, CEO of the St Vincent de Paul Society National Council summed up the budget:

“The Treasurer wants us to live within our means. But this budget does nothing to give ordinary people the means to live.

“This budget, like its predecessors, entrenches inequality rather than fighting it.” (

It is a budget for increased military spending to fight the US’s wars, to host US weapons and facilities. The government is cemented to the US-Australia military alliance, no matter what the cost to the Australian people or economy. It poses warfare against Medicare. It wages war on the poor.

War chest

Military spending will be quarantined. It will be spared cuts. The tax cuts for big business and those on high incomes will be funded by the most vulnerable. There will be no cuts to the war chest.

The war chest is unlike anything in living memory. The budget allocates $195 billion over the next 10 years on submarine, frigate and patrol vessel construction! This is on top of the $30 billion plus per annum in its regular defence budget.

This is the centrepiece of what it calls a “job creation” plan. Yet investment in military industry is not a job creator.

To fund this “job creation plan” thousands of public sector workers will be sacked. Schools, universities, Medicare, public hospitals, public housing, mental health, social security payments, aged care, Indigenous services and women’s crisis centres will have their funding cut.

Medicare rebates will be frozen for the next three years – introducing a co-payment by stealth.

But it is not simply a question of how many taxpayer dollars are directed to military exercises, building and expanding bases, frigates, submarines, patrol vessels, fighter planes, missiles. Hosting and joining the US in its preparations for war against China will have serious repercussions for Australia and the region, possibly even leading to a nuclear war.

Pro-big business

The Guardian described the Coalition government’s first budget in 2014 as “the most reactionary and blatant attack on the working people of Australia in recent history.” It said: “Millions of low-income workers, families, young and old people, Indigenous Australians and people with a disability will be thrown deep into poverty.” (“War on the poor”, #1639, 21-05-2014)

Most of the cuts to health, education, etc continue. These are not mentioned in the Treasurer’s speech or by the media. Treasurer Scott Morrison’s budget speech focuses on the new measures such as corporate tax cuts, the hike in military spending and rise in tobacco excise.

The Big Four banks stand to receive a corporate hand-out of $7.4 billion according to conservative estimates by the Australia Institute as their tax rate is cut from 30 to 25 cents in the dollar on declared taxable profits. The cuts are slated for 2024-5, 2015-26 and 20126-27.

The Turnbull government, is no different to the Abbott-led government, in that it sees itself responsible to big business, not the people who elect it.


The media commentators describe the budget as “bland”. But there is nothing bland about the around $80 billion cut to public hospitals and schools announced in the 2014-15 budget which has not been abandoned.

As a pre-election budget, the government has trod carefully. It restores $1.2 billion for public and private schools – just a fraction of the $46 billion being cut and calls it an increase in funding! The “increase” doesn’t start until 2018 (if ever) and is over three years.

Likewise Morrison attempts to cool the anger over funding cuts to public hospitals by saying he is increasing funding by $2.9 billion over four years. This amounts to a token restoration of some of the $54 billion being cut.

Targeting the poor

The government has done nothing to end the capital gains tax concessions or negative gearing. Its changes to superannuation are far from adequate in stopping the rorting of the system.

The four annual increases of 12.5 percent in the tobacco excise, when applied annually accumulate to a 60 percent increase. The majority of smokers are on low incomes. A packet of 25 currently costs between $25 and $35. The increases would raise that to between $40 and $56.

This comes alongside further measures to take thousands of disability support recipients off their payments, tighten payments for Family Tax Recipients, reduce payments to new social security recipients and restrict the payments of some Work For the Dole recipients. (See “Budget Roundup” for other cuts.)

As Falzon points out, there is nothing for the 105,000 homeless, or the 200,000 households waiting for social housing or the one million households in housing stress.


“We will continue our investment in our national innovation and science agenda – to create our own ideas boom, in every city, in every town, in every factory, farm, shop and office – including support for new start-up businesses,” the Treasurer says.

What a load of drivel!

As they say, actions speak louder than words. It is going to become even more difficult for working class students to gain entry to higher education.

Education Minister Simon Birmingham claims to have shelved plans to deregulate university fees. Don’t believe him for one minute.

As a pre-election budget it confines deregulation to certain courses. It is a pre-election budget. Student fees will increase, students will be required to pay back loans faster, HECS debts will be recovered from deceased estates where they have not been paid back and universities will have their funding cut by 20 percent.

A number of the most unpopular policies are lying in waiting, off the table, until after the elections. If the Coalition wins and gains control of the Senate then they will show their trues colours. The GST, deregulation of university fees, means testing and privatisation of Medicare, the withdrawal of funding for public hospitals and schools, massive public sector cuts, abolition of penalty rates, the Australian Building and Construction Commission will be on the agenda.

Treasurer Scott Morrison talks up the economy. “So like the Australian people, we are upbeat and optimistic, even though some Australians are feeling the transition more acutely in some parts of the country than others,” Morrison says.

But nothing can cover up the fact that the prospects for workers and families are grim.

The economy needs a stimulatory budget, but it is exactly the opposite. It is designed to increase corporate profits, increase post-tax income of the rich, and further cut back the public sector and reducing the living standards and spending capacity of working people.

No plan for renewable energy

The Treasurer talks a lot about transition from the mining investment boom while still committing billions of dollars in corporate welfare to the fossil fuels industry.

Climate change and the environment are short-changed. There is no mention, let alone plan for the transition to clean energy that would power the new economy and create thousands of jobs.

“The government doesn’t see the jobs of the 21st century in building wind turbines and public transport, they see them in building military hardware,” Greens leader Richard Di Natale said.

“While subsidies continue to flow to the fossil fuel industry, more than a billion dollars is being ripped out of clean energy,” Natale said.

This is not the real budget. If the Coalition win the July 2 federal elections, then the real budget will follow.

Throw them out

“A good budget would reduce, rather than entrench, inequality. For a failure to fight inequality is a failure to govern,” Falzon says.

The Coalition government is a failed government and should be thrown out at the elections.

Next article – Editorial – Remember the TPP

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